Retroviral-mediated transfer of new genetic information into keratinocytes is a key step in epidermal gene therapy. An obstacle to the use of retroviruses for gene therapy is that although high levels of expression of the transduced gene can be maintained in tissue culture, expression is often lost when the cells are transplanted to an animal host. To examine some of the factors involved in this instability of expression, we transduced keratinocytes with a retrovirus encoding the gene for human factor IX and monitored secretion of the transduced gene. We observed continued secretion of factor IX through five passages in culture. When, however, sheets of these cells were grafted to athymic mice, factor IX expression was reduced or lost within 6 wk. We show that the reduction of factor IX expression in grafted keratinocytes did not result from a loss of grafted cells, nor was there a block to systemic delivery of a secreted endogenous product.